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U.S. Bank settles lawsuits over overdraft fees for $55M

U.S. Bank has reached an agreement with plaintiffs from a series of lawsuits against the banking giant to settle accusations that it improperly calculated debit card and ATM transactions to drive up overdraft fees. If approved by the federal judge overseeing the case, the company will pay $55 million in the agreement. The settlement is the latest in a series of similar complex business litigation involving many of the nation's largest banks, which has locations in Nevada.

Three lawsuits were filed against U.S. Bank in 2009 and 2010. The suits, which sought class action status, accused the bank of organizing customers' debit card and ATM transactions in order of largest to smallest dollar amount instead of chronologically. By deducting the largest amounts from checking and savings accounts first, U.S. Bank put their customers at risk of being overdrawn sooner, the lawsuits contended. As a result, the bank collected more revenue in overdraft fees.

More than 30 other banks have been sued for allegedly similar practices. Among them were U.S. Banks fellow giants Bank of American and Wells Fargo. Bank of America settled the litigation against it for $410 million in 2011, suggesting that U.S. Bank may be getting off relatively lightly.

The company says it has changed its policy so that it no longer orders transactions by dollar amount. "We have made changes to the way we handle customers' accounts in recent years, and we will continue to look for opportunities to enhance our customer products," a spokesman said in a statement about the settlement agreement.

The judge has to approve the settlement for it to become official. He is expected to review the agreement in the next 90 days.

Source: Minneapolis Star Tribune, "U.S. Bank to pay $55M to settle overdraft lawsuits," Jennifer Bjorhus, July 2, 2012

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